It’s always a gamble with new technologies. If you were an investor in the 90s and believed in the then nascent digital imaging technology, chances are you got your fingers burned. It was two U.S. scientists who developed the first imaging sensor already in 1969, but it took until 1986 when Eastman Kodak launched the first digital imager with a resolution of more than million pixels. The mass production of digital cameras only picked up pace in this millennium. Record sales years of digital cameras were 2008 and 2010. Purchases since are declining — blame the ever more powerful smartphones –, and if you’d have thought in the 90s you’re a genius and invested in Kodak, well, you’d be eating grass today. But even with photography-related stocks, you can still make money today, just not the way you might think.
Without Steve Jobs, and without the transition of digital imaging technology from old-fashioned cameras to portable devices, sales figures of digital cameras these days could be stunning. A linear development of camera sales could have led to the production of currently 200 million units. Last year, however, only 40 million cameras were sold, only a third of the camera sales back in the year 2000!
Quality cameras still sell considerably well. What’s totally crashed is the compact camera market. The broad population of snappers is completely happy with the quality and technology offered by smartphones. Now just imagine if you would have foreseen this trend. BTW, it was Sharp, and not Apple, that launched the first camera-phone in Japan in the year 2000, but who will ever forget the true pioneer of smartphones with a camera: the R.I.P. Palm Treo 650. Still have one, and still works!
It took many more years until the image quality of these ultra-portable devices reached a satisfactory level. Since 2009, the average resolution is about 3MP or more, and the ascent of the mobile Internet increased smartphone sales exponentially.
Instantaneousness, the power to share visuals instantly with anyone anywhere in the world, is a key factor behind the explosive growth of a technology that, in fact, is meanwhile nearly half a century of age. The whole simplification of a once complicated process is today responsible for about 1.8 billion (!) photos shared each and every day. That’s about 700 million shared images on Snapchat every day, on Facebook some 350 million.
As a consequence, we all know what happened to the once untouchable camera giants. Kodak is gone, Canon remains relevant because they cleverly diversify. Their share value is about the same as three years ago, even though the broad Japanese Topix share index doubled since. Nikon? Their value on the stock market halved within the past three years. Their market share is some 17% and they’re struggling.
So who are the winners?
They’re hardly known, you might not even have heard of them. The winners of the digital imaging revolution are the producers of camera modules who supply the smartphone brands. This year alone they’re expected to sell some two billion modules. Because more and more our smart phones have not only one, but two cameras, one on the back, one on the front. That’s doubling sales. Today, about 60% of all smartphones have two imager modules.
It goes without saying, cost pressure in the sector is tough, but consumers demand ever better quality, the race will be on for many years to come. So, if you would have bought a company with the trivial name Sunny Optical (HKG-listed) as a 2009 new year’s present, you’d have made a fortune. Your stocks’ value would have steadily multiplied by a factor of 30 by now. Sonny Optical increased profit by 40% since 2010. 90% of their turnover is generated from optical modules, most of them sold to China where they enjoy a market share of 50%.
if you have a Huawei, Oppo, Coolpad or Xiaomi phone, chances are you also have a built-in Sonny Optical camera. Never heard of Xiaomi? Well there is more to life than Apple and Samsung. Founded only five years ago, Xiaomi sold 61 million units last year. Their model Redmi is the most widely used smartphone in China, costing less than $150.
Other camera module producers are Taiwan’s Lite-On (TPE) and LG Innotek (KRX) and Partron (KOSDAQ) from South Korea. They drive today’s booming photography revolution. Hardly anyone knows them, and maybe they prefer it that way. They don’t need huge marketing budgets for brand recognition. They deliver what we need, like food and water and air and sleep: inconspicuous technology that enriches our lives.